China wary of ripple effects as power-producer provinces combat drought
- The southwestern provinces of Sichuan and Yunnan, China’s major producers of hydroelectric power, have been contending with drought
- Dry spell threatens more than just agriculture, as memories of recent blackouts loom large and conditions could stunt aluminium sector
China’s Ministry of Water Resources has marshalled resources for a large-scale drought response in the southwestern provinces of Yunnan and Sichuan while advising other regions to monitor their situations closely, raising worries over the impact of extreme weather on this year’s grain, hydropower and aluminium production.
As part of its level four emergency protocols – the lowest in its four-tier system – the ministry will send a working group to the provinces to guide relief work, and has asked other grain-producing regions to prepare for possible dry periods in advance.
“The drought may continue to develop as spring rainfall in the region is relatively low and water storage is also gradually decreasing,” the ministry warned in a statement on Friday. “The temperature is rising rapidly and water consumption is also increasing for spring farming.”
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“The drought will impact this year’s agricultural production as it coincides with the spring ploughing season across China, but the extent of its impact on food production will depend on how well local governments respond to drought,” said Peng Peng, executive chairman of the Guangdong Society of Reform.
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The drought will also affect electricity demand for industrial hubs, Peng said, such as the southern province of Guangdong – China’s largest regional economy which, according to government data, relies on Yunnan for one-third of its electricity supply.
In 2022, nearly 70 per cent of Guangdong’s external electricity supply came from Yunnan, Tianfeng Securities data showed.
The province has a production capacity of 6.1 million metric tonnes, and according to local government projections will eventually be able to produce 8 million, one-fifth of China’s total.
Since 2017, Yunnan has received transfers of aluminium smelting infrastructure from the eastern province of Shandong, part of plans to become a green industry centre by using its considerable hydroelectric capacity to power the energy-intensive sector.
But S&P Global estimated last year that the aluminium sector consumes 42 per cent of the province’s industrial electricity, aggravating power shortages in the region.
“Yunnan’s aluminium industry will be hit by the power shortage, although the current short-term production cuts are unlikely to have a major impact on the whole industry,” Peng said.
With heightened demand for aluminium and the continuing drought, Yunnan is likely to see power shortfalls this year, up to 27 billion kilowatt-hours’ worth as calculated by the Kunming Power Exchange Centre last month.
